Why global venture capital investment fell in Q1, 2022

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The global venture capital investment, impacted by macroeconomic trends, recorded a 16% quarter-on-quarter (QoQ) decline to reach $195 billion in Q1 2022. North America accounted for around $95 billion in terms of deal valuation. During the same period, there is a QoQ 11% fall in unicorn births according to GlobalData.

“The global economy is struggling with the ripple effects of the Ukraine-Russia war coupled with supply chain challenges and capital market volatility. There are concerns around Omicron cases in a few major countries,” said Abhishek Paul Choudhury, Senior Disruptive Tech Analyst – GlobalData.

“Considering such events which are pushing up the inflation and interest rates, the VC and unicorn markets can be termed as relatively strong,” added Choudhury.

An analysis of the Deals Database of GlobalData’s Disruptor Intelligence Centre shows the fluctuating trend of venture capital activities and unicorn births during 2021 and a QoQ drop during the last quarter.

Geographical analysis
The QoQ deal valuation rate in North America fell by around 8% and in South & Central America, it was flat. MENA recorded a QoQ valuation growth of about 19% while APAC witnessed a dip of nearly 26%. Europe witnessed a 12% QoQ valuation growth.

Sectoral analysis
The power and utility sector registered a maximum YoY increase in investment value by 72% followed by the food service sector at around 63%. The industrial goods & machinery sector recorded a nearly 66% nosedive followed by the automotive sector, which registered a decline of about 50%.

Thematic analysis
The notable technology themes that garnered attention during the quarter were digital media, artificial intelligence (AI), cloud, e-commerce, big data, and blockchain. Among the top 10 deals, fintech and digitalization broadly dominated the investments.

Unicorn analysis
Although the birth of unicorns marginally declined as compared to the previous quarter, there was a 13% cumulative growth to a total of 1,092 and the valuation trend showed 13% QoQ growth. RealtimeBoard, ConsenSys Software, and RELEX were the top three companies in terms of valuation.

“The market showed resilience to the economic headwinds during the reporting period and is estimated to grow further owing to the rising demands for the incorporation of emerging tech-enabled solutions across various sectors. Moreover, post-money valuations suggest a constantly growing universe of unicorns,” concluded Choudhury.

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